Senior writer Bill King on why UFC was willing to giveup lucrative pay-per-views to make a deal with Fox.

Senior writer Bill King talks about the implications of
UFC's long-term deal with Fox.

After a press conference to announce the UFC’s landmark move to Fox in August, Lorenzo Fertitta flew home to Las Vegas, arriving late in the afternoon. The billionaire owner of the mixed martial arts circuit turned on the TV, flipping channels until he landed on a preseason NFL game, Steelers against the Eagles.

Fox’s history of promoting the properties in which it invested was one reason the UFC struck the deal. It wouldn’t take long for the network to drive the point home.

As the first quarter of the game closed, the words “Coming this fall” flashed onto the screen, followed by 15 seconds of quick takes from UFC events. Then came the UFC on Fox logo, which since then has tagged promotional spots that have appeared frequently across Fox programming, including during NFL games and the World Series.

“It was crazy,” said Fertitta, who on Saturday night will watch the property he bought a decade ago make its debut on Fox, which will air Cain Velasquez’s heavyweight title defense against Junior dos Santos. “We had actually just done the press conference on the Fox lot. And there we are on an NFL preseason game, the same day. I mean, right away. We started cracking up. They said they were going to promote us and they really were.”

The UFC will debut on Fox with the Cain Velasquez-Junior dos Santos heavyweight fight.

Promotion was not the only reason that the UFC chose Fox. The network’s financial package, which sources placed at an average of $90 million a year for seven years, or more than double the reported $35 million a year that the UFC had received from incumbent Spike, certainly helped. Fox also had the ideal mix of channels for the UFC’s programming: The mothership Fox network to appeal to new advertisers; FX, popular with the UFC’s core 18- to 34-year-old demographic but chock-full of well-regarded original programming, as the future home for “The Ultimate Fighter”; and Fuel TV and the Fox Sports Net RSNs to carry shoulder programming.

Still, Fox’s proven ability to take a fringe sport and expose it to the mainstream was attractive to the UFC, which still sees itself as a property in the early stages of growth.

Fox has promoted Saturday’s fight with spots on NFL and MLB games.

“When we were on Spike TV, that was a launching pad,” Fertitta said. “We look at Fox as a bigger and better platform that could elevate the brand.”

The early returns have been strong, Fertitta said. The “UFC Primetime” preview show that Fox aired after its NFL telecasts two Sundays ago drew a 1.3 rating, which equates to about 2 million viewers. That about doubled the audience for similar UFC preview shows on Spike. Saturday night’s prime-time debut was close to sold out shortly after it hit the street, Fertitta said. Fox typically gets about $50,000 for a 30-second spot during its Saturday night programming, according to survey results published by Ad Age. ABC gets about $85,000 for spots on Saturday night college football.

While Fox Sports co-President Eric Shanks would not discuss specific rates for the one-hour, one-fight show, he said they exceeded expectations.

“The first fight out of the gate, there is tremendous interest,” Shanks said. “We had no problem selling at a good rate. And we haven’t even started the seven-year clock yet.”

Most of the advertisers will be those that have attached to the UFC’s “Ultimate Fighter” series in recent years. Dodge — long rumored, but not yet confirmed, as a UFC official-status sponsor — will be on the ring mat as the fight’s primary sponsor. Anheuser-Busch and the U.S. Marines are among the other carry-overs. Movie studios Warner Bros. and 20th Century Fox also bought spots.

Sales staff members from the UFC and Fox went on at least 15 joint sales calls together in October, said Mike Mossholder, vice president of marketing partnerships for the UFC. But most of those were focused on landing new business for next year.

“Ultimately what we’re trying to do [with Saturday’s inventory] is make sure our existing partners are well taken care of,” Mossholder said. “Our first objective is not to chase new money for one-offs. More of the new deals will start in the first quarter.”

Fox told the UFC from the beginning that it hoped to make an introductory splash with a fight in 2011. While the UFC’s cable rights are tied up with Spike and Versus through the end of the year, the property always had the right to strike free-standing over-the-air deals. It just never wanted to do it as a one-shot trial. As a launching pad for a larger, long-term play, Fertitta and UFC President Dana White liked the idea.

In order to deliver Fox a heavyweight championship fight, the UFC had to walk away from what likely would have been a $10 million to $15 million pay-per-view payday. Velasquez vs. Dos Santos likely would have brought in upward of 400,000 pay-per-view buys, based on results for similar fights. Fertitta said he budgeted the fight at 800,000 buys, pointing to recent heavyweight title fights that delivered more than 1 million buys. But those featured former champion Brock Lesnar. This one doesn’t.

Still, even at 400,000 buys, the fight would have delivered the UFC $8 million to $9 million in revenue after splitting the bounty with distributors. The UFC also had to buy out Velasquez, whose contract called for a share — albeit likely a minute one — of the pay-per-view.

“We’re flat out going to lose money on this fight,” Fertitta said. “But that’s the investment we’re making. Those are the steps we’ve got to take to make Cain and Junior pay-per-view stars and lift up the whole thing.”

Fertitta envisions an opportunity to create 100,000 new pay-per-view buyers from the exposure the UFC gets on Fox Saturday night. Surveys show that buyers will buy four pay-per-views a year, on average, he said.

“Maybe we think a little funny here,” Fertitta said, “but that’s well worth forgoing $16 million. Take that out over the next 10 years and we get a healthy return.”

For its part, Fox says it will deliver the UFC a brand bomb unlike any it’s gotten previously. On top of all the promotion across its networks, Fox will produce a two-hour prefight show that will air live on Fuel, hosted by analyst Jay Glazer, which will include red carpet arrivals and interviews with celebrities, fighters and White. That leads into the 9 p.m. Eastern start on Fox. Its prefight show will include features on both fighters, as well as live locker room interviews, followed by the walk-ins for which the UFC has become known.

“One of the coolest things in all of sports is the walk-in,” Shanks said. “There is nothing better than the drama they set up.”